Prospect of Proposals to Curtail Advertising

Development of shortages of civilian goods, as the rearmament program takes an increasing share of the total national output, may generate demands for government action to discourage large advertising outlays by manufacturers and merchants. The staff of the congressional Joint Committee on the Economic Report suggested six months ago that “From a general economic point of view, one of the most desirable excise taxes that could be levied would be a tax on advertising, especially on that urging consumers to buy consumer goods.” That suggestion fell on deaf ears at the time, but proposals to curtail advertising may well be heard again when scarcities of advertised civilian products appear in the wake of expanded military production.

Objections to Wartime Institutional Advertising

Some economists regard the competitive advertising of competing but perhaps equally good brands of the same product as an economic waste, because it adds to selling costs and thus may tend to increase prices. But such theoretical objections have not prevented the growth of advertising as a characteristic, if not essential, part of the distribution system in a dynamic private-enterprise economy.

During the war, when conditions of production and distribution were distorted by the overriding military demand, criticism was directed at large-scale advertising of consumer goods not currently available on the civilian market. It was widely believed that the high wartime corporate excess profits tax encouraged lavish advertising expenditures, in effect at the expense of the government. At the same time, so-called institutional or good will advertising was defended as a justifiable means of keeping brand names before the consuming public pending return of the advertised products to dealers' shelves.